Contact:	Clarence Mills (202) 543-1440 c.mills@att.net
For Release:	Immediate News Bulletin PR-49 July 30, 2008

Senate Banking Committee Reviews Insurance Regulation

Hearing is Precursor to Future Federal Regulatory Efforts

WASHINGTON, D.C., July 30, 2008 - The U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing on "The State of the Insurance Industry: Examining the Current Regulatory and Oversight Structure." U.S. Sen. Tim Johnson, D-S.D., in his Statement for the Record, addressed the need for modernization of the insurance regulatory structure into an optional federal charter (OFC) to establish the United States as an international competitor in the insurance industry. Further, he pointed out the direct correlation between the lack of a central insurance regulator and the economic risk and trends in financial markets, reiterating his point that the United States needs a federally regulated insurance sector.

Some insurance companies and representatives of the American Insurance Association (AIA) have argued in favor of an OFC. Alessandro Iuppa, senior vice president of government and industry affairs for Zurich North America, stated in his testimony for the July 29 hearing: "The reality is that today's marketplace - both national and international - demands faster and far more dramatic action than the states alone are able to provide. As I have mentioned, insurance is no longer the local market it once was. Insurance consumers have exposures across the country and around the globe, so state boundaries no longer match our customers' national and international business models. And the states - with their differing and sometimes conflicting laws and rules, their sometimes widely varying interpretation of those laws and rules, and their inconsistent and sometimes inflexible implementation - are simply not equipped to handle this increasingly complex and sophisticated marketplace."

The Automotive Service Association (ASA) supports federal regulation of the insurance industry, but not an optional charter.

A bit more skeptical of a federal charter, however, is the Consumer Federation of America (CFA). In attendance at the hearing was CFA's legislative director Travis B. Plunkett, who also recognizes the need for changes in insurance industry regulation. He said, "America's insurance consumers, including small businesses, are vitally interested in high-quality insurance regulation. I am sad to say, however, that the quality of insurance regulation is weak and declining throughout the nation today.

"We do support legislation that would repeal the McCarran-Ferguson Act's broad antitrust exemption that insurers enjoy, to end the collusive pricing and other market decisions that are legal today."

ASA supports repeal of the McCarran-Ferguson Act.

According to Plunkett, if Congress moves to an OFC, it needs to follow a different legislative path than Congress is currently considering. He supports the "Pro-Consumer Approach to National Insurance Regulation: The Insurance Consumer Protection Act of 2003," which was offered several years ago by Sen. Ernest Hollings of South Carolina. Plunkett said, "The drafters of this legislation - introduced by Hollings before he retired - considered the consumer perspective in its design. S. 1373 of 2003 would have adopted a unitary federal regulatory system under which all interstate insurers would be regulated. Intrastate insurers would continue to be regulated by the states. The bill's regulatory structure requires federal prior approval of prices to protect consumers, including some of the approval procedures (such as hearing requirements when prices change significantly) being used so effectively in California. It requires annual market conduct exams. It creates an office of consumer protection. It enhances competition by removing the antitrust protection insurers hide behind in rate making. It improves consumer information and creates a system of consumer feedback."

To track federal insurance reform efforts, go to www.TakingTheHill.com, ASA's legislative Web site.

The Automotive Service Association is the largest not-for-profit trade association of its kind dedicated to and governed by independent automotive service and repair professionals. ASA serves an international membership base that includes numerous affiliate, state and chapter groups from both the mechanical and collision repair segments of the automotive service industry. ASA's headquarters is in Bedford, Texas.

ASA advances professionalism and excellence in the automotive repair industry through education, representation and member services. For additional information about ASA, including past news releases, go to www.ASAshop.org, or visit ASA's legislative Web site at www.TakingTheHill.com.

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